811.054/12–354

Memorandum by the Acting Assistant Secretary of State for Inter-American Affairs ( Sparks ) to the Secretary of State 1

confidential

Subject:

  • United States Anti-Trust Suit Against United Fruit Company

Discussion:

An anti-trust civil suit was commenced by the Attorney General against the United Fruit Company by filing a complaint in the United States District Court at New Orleans, Louisiana on July 2, 1954. The suit alleges monopolistic practices by UFCO and, more broadly, that the defendant constitutes a monopoly of the banana industry; the relief prayed for included, among many other things, divestiture of foreign holdings making up the monopoly and termination of exclusive contracts for purchase of bananas from independent growers. On November 9, Assistant Attorney General Barnes notified the United Fruit Company that such divestiture is essential to settlement and therefore rejected the defendant’s draft of a consent decree. It is understood that the suit has been under study since 1937, and the complaint in fact refers to acts committed as long as 25 years ago; filing of the suit was twice withheld since 1946, principally on representations of the Department of State. State interposed no objection when the Attorney General indicated his intention to file suit in June 1954.

United Fruit Company has informed the Department that it cannot and will not consent to divestiture of its foreign holdings, claiming them essential to the integrated successful operations of the banana [Page 263] business. Mr. T. J. Coolidge, Chairman of the Board of Directors, outlined the company’s position generally to Deputy Under Secretary Murphy on November 18, 1954 (Tab A). More complete background is given in my memorandum to Mr. Murphy of November 18 (Tab B).2

UFCO has continuously sought the assistance of the Department of State, originally to prevent filing the suit and later to exert influence toward its settlement. Most recently the company has asserted that it cannot undertake large expenditures to improve and expand its properties in Guatemala and Honduras as long as title to these properties remains under threat of the anti-trust action. We of course indicated that renewed investments by UFCO are most desirable in Guatemala and Honduras as a very substantial contribution to their economies.

ARA believes that continuous difficulties will probably result from this kind of suit, even if successful, inasmuch as the power to enforce an anti-trust decree is largely limited to our jurisdiction, and inasmuch as foreign jurisdictions may not be willing to recognize any such decree. The National Security Council is awaiting the Attorney General’s recommendations, probably in January 1955, on restudy of the anti-trust laws relating to foreign operations by Americans. The Department has not formulated any definite position on the United Fruit anti-trust action. ARA believes that such position should be formulated as recommended below:

Recommendation:

(1) That the Department urge on the Attorney General the desirability of settlement rather than trial, which would have tangible repercussions on this company’s business and possibly other American investments in Latin America; and (2) that the Attorney General be asked to reconsider his insistence on divestiture in settlement.3

  1. Drafted in response to a request from the Secretary by Raymond G. Leddy of the Office of Middle American Affairs, and routed through the Executive Secretariat.
  2. Neither Tab A nor Tab B was found with the source text; copies of the memoranda are in file 811.054/11–1854.
  3. There is no indication on the source text concerning the action taken on this recommendation.